Bressler Risk Blog

David Kluft asks: “Can I depose a witness who was my former client in a topically similar case?” —

• “A college basketball player sued a University in NE federal court, alleging that the coach pursued a sexual relationship with her while she was a student and that led to her removal from the team. The lawyer for the University wanted to depose one of the plaintiff’s witnesses, but the problem was that this witness was a former client of the lawyer in a matter ‘generally described .. as involving potential complaints or past allegations of sexual misconduct against [the witness] by an unrelated third party.'”
• “The witness filed a motion to quash the deposition and to disqualify the University’s counsel. The Court looked to whether the prior matter substantially related to the present one. The matters might have been substantially related ‘if there is a substantial risk that confidential factual information ordinarily obtained in the prior representation would materially advance the client’s position in the subsequent matter.'”
• “Here, the witness argued that the prior representation gave counsel knowledge of his ‘finances, relationships, associations, character and credibility.’ The Court held this didn’t meet the standard because those categories of information were so broad they could apply in any case. Here, the ‘people, events, and legal issues are entirely different,’ despite the superficial ‘topical similarity,’ so there was no substantial relationship.”
• “The court also found that disqualification was not required because the witness was not actually adverse to the University, because he had no real legal exposure. Even if there had been a substantial relationship, disqualification ‘does not extend to situations where a former client faces nothing more than the ordinary obligations of a fact witness.'”
• Case file: here.

“Judge May Preside in Matters Involving Attorney Who Exchanges Case Referrals With Spouse: Judicial Ethics Opinion 26-34” —

• “Digest: Provided the judge can be fair and impartial, he/she may preside in matters involving an attorney to whom the judge’s spouse has referred occasional, discrete cases, and from whom the judge’s spouse has received such cases. The judge need not make any disclosure.”
• “Rules: 22 NYCRR 100.2; 100.2(A); 100.3(E)(1); 100.3(E)(1)(c), (e); 100.3(E)(2); Opinions 20-126; 15-33.”
• “Opinion: The inquiring judge’s spouse, who works in a specialized area of law, occasionally refers cases to another attorney and occasionally accepts referral of cases from him/her. The judge indicates they ‘do not have a formal arrangement, and no referral fees are paid’ between them. The judge asks if he/she may preside in cases involving the other attorney.”
• “Clearly, a judge ‘may not preside over any matters in which the spouse was involved or has an economic interest, including those referred by the spouse, or matters in which the attorney appearing before the judge has an ongoing counsel relationship with the judge’s spouse’ (Opinion 15-33).”
• “However, a judge’s ethical ‘obligations based on a business or financial relationship between their spouse and a particular individual are necessarily fact-dependent’ (Opinion 20-126). We have advised that neither disqualification nor disclosure is required when ‘attorneys to whom the judge’s spouse has referred occasional, discrete cases, or from whom the judge’s spouse has received such cases, appear in the judge’s court’ (Opinion 15-33). In reaching this conclusion, we emphasized (id.):”

Hat tip to a risk expert colleague who noted an interesting “frontier” spotlight of conflicts, client due diligence, and compliance in this AI case study: “How law firm Gilbert + Tobin governs and scales AI with OpenAI” —

• “Gilbert + Tobin used [OpenAI] Codex to help build an AI-enabled workflow for selected conflict, anti-money laundering, politically exposed person, and know-your-customer checks. It completes research and processing steps, then produces a report for human review and sign-off. Selected checks that previously took up to eight hours can now be completed in minutes.”
• “When generative AI began reshaping knowledge work, Gilbert + Tobin saw an opportunity—not to change how it delivers legal advice, but to raise the standard of the operational work that supports it. The firm set out to give every operations team sharper tools for research, drafting, and analysis, while preserving the governance and professional accountability its clients expect.”
• “ChatGPT Enterprise was introduced first to operations teams, where practical use cases could be tested in a controlled environment. From there, adoption expanded into marketing, business development, recruitment, finance, technology, business transformation, and parts of the legal practice. Throughout, the focus has remained on how the firm operates, not on displacing the professional judgment at the heart of its legal services.”
• “Gilbert + Tobin paired that leadership support with role-specific enablement. Instead of relying on generic training, the business transformation team joined individual team meetings to demonstrate workflows tailored to marketing, finance, recruitment, operations, and other functions. Internal videos, showcases, challenges, and use-case stories helped employees keep pace as ChatGPT gained new capabilities.”
• “Gilbert + Tobin handles confidential client and business information, including information subject to different client requirements. Its AI rollout was supported by clear guidance on approved tasks, what employees could enter, and how outputs should be reviewed. The firm also assessed contractual protections, role-based access, data-processing requirements, and administrative controls.”

“Latham & Watkins AI Adoption: How BigLaw Is Deploying Generative AI” —

• “The firm has stood up a Generative AI Task Force, deployed Harvey across thousands of attorneys, rolled out Microsoft 365 Copilot, published external client guidance on AI risk, and built mandatory training into associate development.”
• “The use case BigLaw firms talk about least and undervalue most is conversational client intake and matter onboarding. Latham, like every AmLaw firm, runs a meaningful intake process every time a new matter opens — conflicts checks, engagement letter drafting, scope definition, billing arrangement capture, KYC where relevant, and matter-team selection. Today, most of this happens through a combination of email threads, Word documents, intake portals, and a back-and-forth between business development, the originating partner, the conflicts team, and the new business intake group.”
• “That entire workflow is a conversation pretending to be a form. Engagement letter intake portals demand structured fields (‘matter type,’ ‘billing arrangement,’ ‘estimated fees,’ ‘key parties’). But the signal a client gives over email is unstructured — ‘this is a complicated cross-border thing, we expect to see a counter-bid in two weeks, I need someone who’s worked with the German regulator before, the budget is whatever it has to be.’ Forms flatten that signal. Senior partners then spend their own time translating client narrative into the structured intake fields.”
• “Conversational AI is the right instrument here. An AI intake agent can ask the natural follow-ups a senior associate would — ‘you mentioned a counter-bid; do you want us to start preparing defensive materials now or wait?’ — and capture the matter context in the client’s own language before any structured fields are populated. The structured fields then get derived from the conversation, not demanded up front.”

“Law firm intake that runs the conflict check before anyone calls the prospect back” —

• “An intake workflow for law firms that turns web forms, chats, emails and voicemails into structured intake: matter type, parties, jurisdiction and urgent deadlines. It searches the practice management system for conflicts across the parties and their corporate groups, triages each inquiry against the practice groups’ criteria, and prepares the engagement letter and a consultation slot. A person clears every possible conflict and a lawyer accepts every matter. The assistant never gives legal advice and says it is an AI.”

And in terms of OCGs, one consultant hypothesizes: “Ken Crutchfield: Taking BigLaw Private? The Implications Of Kirkland’s Decision To Stop Disclosing Financials” —

• “Kirkland & Ellis made headlines again when it stated it will no longer disclose financial information to The American Lawyer magazine and other media after 2026. Firm leadership said financial disclosures could put too much focus on quantitative metrics over the quality and caliber of the firm’s legal services.”
• “Clients will still care about financials and reputation, but their interests aren’t necessarily predicated on profit per equity partner and other top-level metrics reported publicly in an Am Law list. They require compliance with Outside Counsel Guidelines (OCGs) to manage supplier risk and pricing, and compliance.”
• “The scope of those guidelines continues to expand, and they now can cover billing, staffing, technology, security, and AI use. It is not difficult to imagine negotiated disclosures of financial metrics privately as a necessary condition of the ongoing relationship.”

“The AI Agent Privacy Problem: Who’s Liable When Your Legal AI Shares Client Data?” —

• “AI agents are no longer a future-facing concept in legal practice. They are already drafting motions, reviewing contracts, conducting due diligence, managing calendars and email, and in some deployments taking multi-step actions across systems. They process some of the most sensitive data that exists: client communications, litigation strategy, financial records, and personal identifying information. Adoption continues to outpace the guardrails designed to protect the data those agents touch.”
• “That gap is still where the liability lives, and the last several months have sharpened the contours of it.”
• “In June 2026, the American Arbitration Association and Integra Ledger announced the Legal Context Protocol, an open standard intended to attach discoverable, verifiable legal terms, consent, and dispute-resolution pathways to agent-to-agent commercial transactions. Founding contributors included Google, IBM, Circle, Wayfair, and others. The protocol remains a useful piece of infrastructure for agentic commerce. It does not, however, resolve the distinct confidentiality, privilege, and professional-responsibility problems that arise when agents operate inside legal workflows.”
• “When a lawyer uses a traditional software tool, the workflow is relatively clear: the attorney inputs information, the tool processes it, and the attorney reviews the output. Privilege and confidentiality obligations run through the attorney’s conduct. AI agents disrupt that model. An agent tasked with drafting, reviewing, or conducting diligence does not simply process information. It can ingest it, retain it (at least temporarily), route it through third-party infrastructure, and in some configurations act on it sending messages, updating records, or accessing systems before meaningful human review occurs.”
• “ABA Model Rule 1.6 still requires attorneys to make reasonable efforts to prevent the inadvertent or unauthorized disclosure of information relating to a representation. ABA Formal Opinion 512 (2024) remains the foundational ethics guidance: lawyers must understand the specific tool’s capabilities and limitations, evaluate disclosure risks before inputting client information (especially into self-learning systems), and obtain informed client consent where the tool’s design creates a material risk of disclosure. Boilerplate engagement-letter language is not sufficient. State bars have continued to apply and refine this framework. Oregon’s Formal Opinion 2026-208, for example, addresses chatbots and AI agents used for marketing and intake, emphasizing competence, supervision, and the lawyer’s ongoing responsibility for accuracy and confidentiality. Florida and other jurisdictions have issued parallel guidance.”
• “The most concrete statutory development arrived at the end of September. On Sept. 30, 2026, California Governor Gavin Newsom signed SB 574, the first state statute specifically regulating generative AI use by attorneys, arbitrators, judicial officers, and alternative dispute resolution providers. Effective Jan. 1, 2027, the law:”
• “When an AI agent generates a contract summary, flags litigation risk, prioritizes documents, or drafts a demand letter, the question whether that output constitutes or materially influences an automated decision with a significant effect on a data subject is no longer purely theoretical. In some jurisdictions it may trigger notice, opt-out, access, or human-review rights that most current legal AI deployments are not designed to honor. Law firms and legal departments that treat these obligations as ‘just another vendor issue’ are exposing themselves and their clients.”
• “Vendor agreements data processing addenda, confidentiality clauses, and terms-of-service representations remain necessary but still not sufficient. They govern the firm-provider relationship. They do not create rights for clients whose data is processed, nor do they substitute for the attorney’s independent ethical and legal duties. Attorneys deploying agents must still ask, and document, the practical questions: Where does the data go? Who can access it? Is it used for training? What is the retention period? What happens in a breach? What permissions does the agent have, and can those permissions be tightly scoped and monitored?”
• “The last few months have also shown that agent behavior can exceed intended scope. Documented incidents involving OpenAI and other developers’ agents attempting or achieving unauthorized access to external systems prompted a Sept. 30 Senate hearing and, on Oct. 1, the announcement of the bipartisan AI Agent Accountability Act by Senators Josh Hawley and Chris Murphy. We’ve seen a rise in law firm data breaches meanwhile News Nation and Fox Business News had me on air to discuss the ‘pacing of the frontier’ and the AI risks ahead. These new proposals would extend Computer Fraud and Abuse Act liability to both operators (for knowingly operating an agent that recklessly causes hacking damage or loss) and developers (for failing to implement reasonable safeguards when they knew or had reason to know of the agent’s hacking capabilities). It would also empower the attorney general and state attorneys general to seek injunctions. Parallel proposals such as the CLAIM Act discussion draft seek to clarify civil liability when agent conduct would be tortious or criminal if performed by a person. These bills are not yet law, but they signal that ‘the AI did it’ is unlikely to be an accepted defense, and that both developers and deployers face increasing scrutiny.”
• “Privilege risks have also moved from theoretical to concrete. Courts have held that materials generated through consumer-grade tools whose terms permit retention or third-party access can destroy attorney-client privilege and work-product protection. The reasonable expectation of confidentiality simply does not exist under those terms.”
• “Technical protocols such as the Legal Context Protocol address one slice of the agentic economy commercial transactions. Professional responsibility rules, state statutes like California’s SB 574, evolving privacy and ADMT requirements, and emerging liability proposals address another. Courts have not yet issued definitive rulings on the full range of agent-related confidentiality and privilege questions, but the direction of travel is clear: the lawyer or firm that deploys the agent remains responsible.”
• “Attorneys who build documented data-governance frameworks around their AI tools—restricted-access environments, least-privilege permissions, human review gates for consequential actions, client disclosure where required, and verification protocols will be better positioned than those who treat agents as ordinary software and wait for a court or bar to define the boundaries after an incident. The liability question is no longer purely open. The answers are beginning to arrive, and they continue to point to the human professionals who choose to deploy the tools.”

“Willkie, WilmerHale Trade Conflict Allegations in Terror Case” —

• “Two Big Law firms are fighting each other over their right to work on a case in which victim families are seeking billions from a company that was convicted of funding terrorism. “Willkie Farr & Gallagher and WilmerHale are trading allegations of ethical conflicts, arguing the other should be removed from the case. The disqualification efforts ramped up this week when partners from both firms sent judges letters attacking their counterparts.”
• “Dismissing either firm could delay several cases, some of which are set to end fact discovery this fall, that together claim more than $2 billion in damages. In one of the cases, about 110 plaintiffs are each seeking more than $10 million in damages.”
• “Holcim Ltd.’s Lafarge in 2022 pleaded guilty to making more than $6 million in payments to benefit groups including Islamic State and al-Qaeda’s Al-Nusrah to keep open a cement plant during the civil war in Syria. The building materials maker paid more than $775 million in criminal fines and forfeiture in becoming the first company the US Justice Department charged with providing support for terrorism, DOJ said.”
• “Lee Wolosky, who joined Willkie in 2025, filed a civil case against Lafarge — one of many the company faces — in 2022. His case seeks monetary damages for roughly 1,000 plaintiffs, many of whom are families of US military members killed by ISIS. Court documents show the case could cost ‘billions.’ WilmerHale joined Lafarge’s defense late last year and sought Willkie’s dismissal starting in February.”
• “According to WilmerHale, Willkie’s conflict stems from a separate group of that firm’s lawyers who represented Lafarge’s former chief executive officer in criminal proceedings in France. The CEO, Bruno Lafont, was sentenced to six years in prison in April. Willkie lawyers began representing Lafont in 2016 related to an internal investigation the company pursued into the payments being made in Syria, court documents show.”
• “‘The same firm is thus advancing irreconcilable positions about the same person and events in concurrent proceedings,’ David Bowker, partner-in-charge of WilmerHale’s Washington office, wrote Monday to US District Judge Nicholas G. Garaufis.”
• “Willkie in April called WilmerHale’s dismissal effort ‘belated and tactical.’ When Wolosky joined Willkie, the firm erected an ethical wall screening lawyers who worked on Lafont’s criminal case from those prosecuting the civil case against his company, firm lawyers said in court papers. The firm also said an ethical screen had already been in place for the criminal case dating back to 2018, though it didn’t specify the reason.”
• “Still, the firm emailed all the plaintiffs in the case to inform them of WilmerHale’s dismissal effort. ‘No plaintiff has expressed support for disqualification,’ Wolosky wrote. (Bowker this week said some plaintiffs in depositions were not aware of the details of the conflict.)”
  Willkie’s Allegations”
• “Willkie claims WilmerHale is conflicted in the case due to its prior work advising the family of American journalist Jim Foley, who ISIS killed in 2014. WilmerHale advised the family that it could not pay ISIS for his release, yet it plans to argue that Lafarge’s payments to ISIS were made under threat of violence, according to Willkie.”
• “Willkie also says WilmerHale failed to promptly screen partner Matthew Olsen from the Lafarge defense. Olsen joined WilmerHale last year after helping the government secure Lafarge’s guilty plea, Willkie claims. Olsen has since left the firm.”
• “The case is: Finan et al v. Lafarge S.A., E.D.N.Y., 1: 22-cv-07831.”

“California SB 574: What Legal Departments Should Know About New Rules for Lawyer Use of GenAI” —

• “California has enacted new statutory requirements governing attorneys’ and arbitrators’ use of generative artificial intelligence (GenAI). Governor Gavin Newsom signed Senate Bill 574 (SB 574) on September 30, 2026 and the law takes effect January 1, 2027. The legislation addresses attorneys’ use of GenAI, court filing verification requirements, arbitrators’ use of GenAI, judicial guidance, and the State Bar of California’s voluntary certification program for alternative dispute resolution (ADR) providers.”
• “SB 574 does not categorically prohibit lawyers from using GenAI. It permits lawyers to use GenAI to assist in legal practice but prohibits delegating the practice of law to GenAI without defining where permissible assistance becomes prohibited delegation.”
• “Beginning January 1, 2027, California lawyers using GenAI must protect confidential, personal identifying, and other nonpublic information; take reasonable steps to verify GenAI outputs and correct erroneous or hallucinated material they use; disclose GenAI use for documents submitted to a court; and consider disclosure for content provided to the public.”
• “Litigation workflows may need to change. An attorney responsible for submitting a Covered California court filing must personally verify all citations in the filing, regardless of whether GenAI was used.”
  Legal departments should consider internal and outside counsel GenAI practices, including approved AI tools, information governance controls, review of “AI-assisted work, court disclosure processes, and outside counsel guidelines.”
• “The statute leaves key operational questions unanswered. These include what degree of attorney involvement separates assistance from delegation, what GenAI use triggers court disclosure, and how the statute applies to increasingly autonomous or “agentic” AI tools.”

“Fisher Phillips Giving ‘Flexibility’ to its New Miami Lawyers, Who Will Split Practices Between Two Firms” —

• “Fisher & Phillips is allowing a seven-attorney group that opened its Miami office to also continue practicing with their former firm in a two-year arrangement that allows for ‘flexibility’ to continue serving clients in nonlabor and employment work.”
• “The Am Law Second Hundred firm announced Thursday that it was adding a seven-attorney group from Coral Gables-based employment and business law boutique Zumpano Castro—including its two named founders—to open Fisher Phillips’ first office in Miami.”
• “However, because all seven also have active practices in such areas as corporate, insurance defense and complex commercial litigation which are ‘outside the scope of the Fisher Phillips practice,’ they will split their time between both firms, said Fisher Phillips managing partner John Polson.”
• “The Florida Bar Association clarified in a 1994 opinion that a lawyer licensed in the state ‘is not ethically precluded from practicing simultaneously in two separate, bona fide law firms’—though is also subject to the Florida Rules of Professional Conduct governing conflicts of interest and requirements for disclosure and client consent if conflicts exist.”
• “Polson, who has practiced with Fisher Phillips for decades, said he believed the firm had been involved in similar dual-firm arrangements with attorneys when they joined the firm—but none for the length of time planned with the Zumpano attorneys. ‘We’ve done it on a short-term basis, but not for two years like we’re doing here,’ Polson said.”
• “Zumpano Castro will continue to operate as an independent firm with practice areas like real estate investment transactions and insurance defense litigation ‘outside the scope’ of Fisher Phillips’ labor and employment practices, said a spokesperson for Fisher Phillips.”
• “Polson said the addition of the seven-attorney team was ‘definitely not a merger’ between the two firms. ‘That is a separate law firm with its own business, and they have lawyers that don’t work for us as well as those that work for both firms,’ Polson said.”

“In Legal Malpractice Suits Against Am Law 200 Firms, Stranger Things Surfaced” —

• “Law.com Radar detected a raft of legal malpractice actions against the nation’s top law firms last month, including cases over ‘Stranger Things’ copyright claims, a busted marriage and a besmirched reputation. The platform detected 62 lawsuits in September involving Am Law 200 firms as litigants, 48 of which involved firms as defendants. By comparison, the platform flagged 53 new lawsuits in August involving Am Law 200 firms as litigants, including 36 cases against the firms. The numbers reflect a general increase in civil court filings in September, following a typical slowdown near the end of the summer season. Radar surfaced 171,379 new lawsuits in September, compared with 167,755 in August.”
• “Law firms Robins Kaplan and Boren Osher Luftman were hit with a lawsuit over millions of dollars in legal fees. The case was brought by their former client, Irish Rover Entertainment, which dropped its earlier copyright infringement action in August 2023 against Netflix over the smash hit ‘Stranger Things,’ a series about a group of kids in rural Indiana who confront creatures from the alternate dimension
• “Irish Rover’s suit against its two former law firms, filed last month, alleges that they had undisclosed conflicts in their simultaneous representation of an individual who provided funding for the litigation with interests that limited the firms’ representation of Irish Rover. The lawsuit, filed in California state court by Grant Shenon Almaraz, seeks to declare the fee agreements unenforceable and a determination that Irish Rover principal Jeffrey Kennedy is not personally liable for the fees.”
• “The suit follows an arbitrator’s decision, now on appeal by Irish Rover in a separate action, that awarded Robins Kaplan more than $1 million in fees and Boren Osher more than $523,250 in fees, according to the September lawsuit. Irish Rover’s September lawsuit also seeks the disgorgement of over $1.4 million it claims it paid the firms. The law firms did not respond to a request for comment.”
• “Meanwhile, former Orrick, Herrington & Sutcliff partner Kurt Mulville sued Fox Rothschild, claiming that one of its attorneys representing him in a divorce took a leave of absence to care for a sick family member. The pro se action, filed in California state court, claims that Fox Rothschild failed to notify Mulville of the lawyer’s leave and did not assign another lawyer to the case. The suit further claims that Fox Rothschild failed to appear in court on his behalf, triggering sanctions against Mulville, and ‘took no meaningful steps’ to advance his case, despite billing him for the firm’s work. Fox Rothschild did not respond to a request for comment.”
• “McDermott Will & Schulte along with Dechert and a lawyer who practiced at both firms were popped with a $75 million defamation suit filed by Eleni Tserpelis, a former partner at BDO USA. The federal lawsuit, filed in New York’s Southern District, alleges that attorney Michael Sheehan made false statements to legal news website Law360 claiming that Tserpelis was terminated from the accounting firm for performance failures. The suit, brought by Filippatos PLLC and Mesidor PLLC, also claims that Sheehan falsely asserted that Tserpelis used her son’s catastrophic medical condition as cover for her own shortcomings. McDermott Will, Dechert and Sheehan did not respond to a request for comment.”
• “… a wave of suits claiming that Am Law 200 firms played key roles in their clients’ financial scams, Ponzi schemes and fraudulent deals. Defendants include Willkie Farr & Gallagher; Morgan, Lewis & Bockius; and Burr & Forman, among others. Add to that pile Ashurst Perkins Coie, which was smacked with a complaint filed in Washington state court by trustees of the iCap Trust. The lawsuit alleges that Ashurst Perkins Coie was complicit in the squandering of $230 million from more than 1,800 investors in a Ponzi scheme. Ashurst
• “Also last month, Offit Kurman sued Actionstep, claiming the legal tech company failed to deliver promised systems integration of the law firm’s email, billing and document management. The suit seeks rescission of the contract, which allegedly included licenses for the company’s platform for $199,000 in the first year. Actionstep did not respond to a request for comment.”

“Private Equity Blocked From Buying Stakes in Tennessee Law Firms” —

• “Tennessee’s Supreme Court declined to allow private equity and other investors to directly buy stakes in the state’s law firms, while signaling openness to other regulatory changes related to the practice of law.”
• “The court in an Oct. 2 order said it will not change the state’s ban on non-lawyer ownership of law firms, maintaining widely observed US limitations on who can own and profit from legal services. The decision is a contrast to the minority of US states where law firms owned by non-lawyer investors, such as Arizona’s alternative business structures (ABSs), have their Supreme Courts’ blessing.”
• “‘At this time, the Court has not identified sufficient need or support for reforms related to non-lawyer ownership of law firms or fee-sharing with non-lawyers,’ the court said. ‘The Court may revisit this topic in the future as additional data regarding the success of these reforms becomes available.'”
• “Investors wanting to cash in on Tennessee law practices will need to employ the work-around of a management services organization. MSOs, businesses that run the administrative functions of law firms for a hefty fee, have gained favor in the investor community as a means for non-lawyers to share in the ownership and wealth of law firms without running afoul of the profession’s regulatory limitations.”
• “Other states such as Arizona and Utah have opened law firms to direct investment by modifying rules restricting ownership and profit of law practices to licensed attorneys. Interest in the Arizona program has cooled as the state tightened its requirements and investors turned their attention to MSO deals.”
• “‘I don’t see them as foreclosing non-lawyer ownership forever,’ Memphis-based Adams & Reese partner Lucian Pera said of the Tennessee court. ‘The court didn’t go down that road this time but it didn’t say this is antithetical to the core values of the profession. They just said we’re not doing this now.’ Pera advocated for the changes and helped draft Arizona’s changes to its law firm ownership rules.”

“Australian ban on new KPMG contracts still leaves room for $38.5M to flow to consulting firm” —

• “The federal government awarded KPMG AUD$38.5 million, even as the company is blocked from new federal government contracts after whistleblower allegations raised questions about its ethical soundness.”
• “KPMG has overhauled its Australian leadership, exited partners and announced nearly 390 job cuts as it grapples with the ongoing fallout from claims it misused confidential client information to win work. The Department of Finance in June told agencies to stop awarding work to the firm for callouts that closed between June 16 and Sept. 30 — later extended until Oct. 31 — as former senior public servant Ian Watt investigates the firm’s governance, culture, ethics and integrity frameworks.”
• “KPMG agreed to comply and has not bid for new work, but the terms of the freeze have still allowed six departments to send tens of millions of dollars to the firm — including through contracts that were finalized before it came into effect and amendments to existing arrangements.”

“Judges don’t need to recuse from cases with critical attorneys, MD panel says” —

• “Maryland judges don’t ‘necessarily’ have to recuse themselves from cases in which a lawyer actively opposed their appointment to the bench, the state’s judicial ethics panel said.”
• “Finding that the circumstances did ‘not implicate the constitutional grounds for disqualification,’ the Maryland Judicial Ethics Committee wrote in a Monday opinion that if the rules were interpreted otherwise, an attorney dissatisfied with a judge’s appointment or rulings ‘could judge shop simply by voicing that dissatisfaction on the record.'”
• “A judge, who was not named, had requested the ethics opinion after an attorney moved for the judge to recuse themselves from the proceedings ‘that day and from all future cases in which the attorney appears.’ The attorney said that they had previously contacted members of the judicial nominating commission and ‘anyone else who would listen’ about their opposition to the judge being appointed to the bench, according to the decision.”
• “The attorney also described a ‘contentious professional relationship’ with the judge, identifying criticisms the attorney had previously expressed concerning the judge’s ‘work ethic, ethics, honesty, candor, and professional conduct’ while they were an attorney.”
• “The judge said that they did not have personal knowledge of all of the matters the attorney had raised but believed they ‘could preside fairly and impartially over matters involving the attorney.’ The judge moved that day’s proceedings to another judge out of an ‘abundance of caution’ and said they would seek an ethics opinion.”
• “The panel found that the attorney’s opposition to the judge’s appointment — and the attorney’s personal criticism — don’t alone create ‘an objective basis for recusal.’ The exception would be if the judge themself didn’t believe they could ‘remain fair and impartial toward’ the attorney and their clients.”
• Opinion: here.

The latest from Bil Freivogel:

• Exotic Leasing, LLC v. 7th Gear Exotics LLC, No. 2:24-cv-3036 (S.D. Ohio Sept. 29, 2026).
  • “Plaintiff is suing several defendants for fraud. Two defendants moved to disqualify one of the lawyers for Plaintiff (‘Lawyer’) because Lawyer had at one point represented one of the defendants in an arguably related case. When Lawyer saw the issue, Lawyer withdrew from representing that defendant.”
  • “Nevertheless, in this opinion the court granted the motion to disqualify. The defendant claimed Lawyer violated the hot potato rule. Our take is the court believed even if Lawyer appropriately withdrew from representing the defendant, Lawyer then ran afoul of Rule 1.9 because he would now be opposing his former client in a matter substantially related to his representation of the defendant.”
• Peters v. Portsmouth Plumbing Servs., Inc., 2026 WL 2917599 (Va. App. Sept. 29, 2026).
  • “This opinion deals with the scope of a workers’ compensation settlement agreement, not a lawyer conflict. However, the court felt compelled to discuss, in Footnote 2, the extent to which a lawyer could represent both the injured employee and a medical provider in the same proceeding. The court said it is OK if both parties consent in writing and the the parties positions are not so adverse as to make the conflict unwaivable.”
• Grenier v. Drolet, 2026 QCCS 3282 (CanLII) (Super. Ct. Que. Sept. 10, 2026).
  • “Defendant Drolet moved to disqualify Plaintiff Grenier’s lawyer (‘P Lawyer’) and P Lawyer’s law firm. The problem was P Lawyer, while representing Grenier, spent eight months, in 2025 and 2026, in the law firm representing an impleaded party (‘IP’), not Drolet, in this case.”
  • “Nevertheless, the court, in this opinion, denied the motion to disqualify. While IP’s law firm did not do a rigorous conflicts check when P Lawyer arrived in 2025, and while it did not erect a formal screen between P Lawyer and the lawyers for IP, the circumstances, as a whole, were such a member of the public would not suspect P Lawyer would have obtained information about IP, P Lawyer could use against IP in this case. Further, the court noted other factors suggesting Drolet brought the motion to disqualify for strategic purposes.”
• Solos Tech. Ltd. v. Meta Platforms, Inc., No. 26-cv-10304-ADB (D. Mass. April 6, 2026).
  • Morgan Lewis (‘Morgan’) has appeared for Defendant Oakley, Inc. Oakley is an affiliate of Kopin Corp. In 2019 Morgan represented Kopin in transactions in which Solos purchased Kopin’s smart glasses business. Morgan dealt with Kopin’s CEO (‘CEO’) during those transactions. CEO then became CEO of Solos.”
  • “Solos moved to disqualify Morgan under Rule 1.9. In this Order the court denied the motion to disqualify. First, the court noted Morgan never represented Solos, and Kopin’s smart glasses business being transferred to Solos did not make Solos Morgan’s client. Nor, did Morgan ever represent CEO.”
  • “Also, Kopin’s retaining a minority ownership in Solos as a result of the 2019 transactions did not prevent Morgan from being adverse to Solos in this case. Last, the court held the transaction activity back in 2019 was not substantially related to the infringement claims in this case. Thus, no former client, and no substantial relationship.”

“Big Law’s Biggest Nightmare Isn’t Partner Poaching or Mergers. It’s AI” —

• “For all the attention Big Law is paying these days to partner poaching and merger mania, these are not the primary concerns that should be keeping law firm leaders up at night. That would be AI.”
• “We know AI threatens to undermine the economics of the traditional law-firm model. But there’s another risk: AI introduces unprecedented operational dangers into institutions, including law firms, that are built on confidentiality, privilege and trust.”
• “The immediate concern is not an ‘evil robot lawyer.’ It is that AI guardrails are not effectively guarding.”
  In the past few months we’ve seen evidence that systems can be monitored and placed in ‘sandboxes’ designed to restrict access to outside systems, but those protections are not perfect. In July, Anthropic disclosed evaluation incidents in which Claude models, operating without their normal cyber safeguards, gained unauthorized access to computer systems.”
• “This doesn’t mean an AI independently escaped a perfectly sealed prison. Human configuration and security failures were central to those incidents. But that is precisely the warning law firms should take seriously. And law firm efforts at governance won’t necessarily do the trick. AI moves faster than humans. By the time a flaw is detected, it could be too late.”
• “A system does not have to become superintelligent to cause a disaster. It only needs too much access, a badly configured environment and an objective it pursues in an unexpected way.”
• “Law firms are especially exposed because they live on information boundaries: privileged communications, litigation strategy, deal documents, trade secrets, discovery databases, personal information and confidential client files.”
• “Imagine an AI agent authorized to search, summarize, draft, send emails, access databases, execute code, or interact with external systems. The question is no longer merely whether it will produce a wrong answer. It is: what happens when the AI is wrong and has agency?”
• “For a law firm, the consequences of an AI failure can be severe. Mishandled privilege, exposed discovery material, an unauthorized communication, a fabricated authority in a filing, or a breach of a client information barrier could trigger malpractice claims, sanctions, regulatory scrutiny, loss of privilege and reputational damage. Unlike a junior associate, an autonomous agent can act at machine speed and potentially repeat an error across thousands of documents or matters.”
• “The profession has established ways to supervise people—ethics rules, conflicts systems, access controls, audits and training. But who will supervise the AI agents working through the night? Who is responsible when the AI takes an action no one specifically instructed it to take? Who audits its process rather than merely reviewing its output? What happens when its objective conflicts with the client’s interests, the firm’s interests, or the system’s own interpretation of its instructions?”
• “Law firm leaders don’t need to resolve every debate about whether AI will become genuinely autonomous or whether the most extreme scenarios are likely. But they need to recognize the risks. No firm wants to be caught having placed extraordinary power inside an institution built on confidentiality without adequate means of controlling it. And experts agree that no one knows whether AI can be controlled.”

“Fla. Firm Looks To Dodge Bank’s DQ Bid In Trade Secrets Suit” —

• “Florida-based Trenam Law fought Friday against a disqualification bid in a trade secrets case over residential solar lending technology, arguing that its prior representation of defendant Climate First Bank ended two years ago and was limited to handling a few real estate deals.”
• “In a response to the disqualification bid, Trenam Law said Climate First overstates the firm’s prior representation of the bank, which involved three real estate lending matters and one general litigation advice matter and ended by September 2024.”
• “The limited representation of Climate First should not preclude Trenam Law from representing plaintiff Atmos Financial PBC, a financial technology platform, in this ‘wholly unrelated’ dispute over the alleged misuse of solar-lending technology and development of a competing platform, according to Trenam Law.”
• “Climate First argued that Trenam Law attorneys met with the leadership team members responsible for developing and implementing the operating procedures for the solar program. But the law firm said just because those people were familiar with the solar program does not mean they shared confidential information about it with the Trenam Law attorneys when discussing unrelated real estate lending matters.”
• “‘The fact that Trenam once met with certain CFB leadership team members about commercial and SBA loans who were otherwise familiar with CFB’s solar lending program does not support an inference that Trenam obtained confidences relevant to CFB’s decisions to purport to partner with plaintiff, to solicit plaintiff’s confidential and proprietary information, and to use that information to develop a competing residential solar lending product and platform,’ the law firm said.”
• “Climate First hired Trenam Law in July 2021. The bank says that between 2021 and 2025, Trenam Law and Climate First’s employees exchanged approximately 1,411 emails on a variety of issues.”
• “In its disqualification motion, the bank said it told Trenam Law about a variety of matters affecting its banking operations, including liability and risk-management issues, loan and mortgage transactions, line-of-credit closing procedures and internal policies and practices.”
• “But Trenam Law says its work for Climate First was limited to preparing notes, mortgages and other lending documents for two real estate lending matters. Neither of the loans were related to the bank’s residential solar lending program, the law firm said.”
• “A third real estate lending matter was opened because the bank had issued a commitment letter to a borrower, but the borrower ultimately chose a different bank, according to the firm.”
• “In addition, Trenam Law said its attorneys provided advice on a narrow legal question regarding a proposed change to the bank’s terms and conditions governing business accounts and the provision of notice of forgery. The firm provided an answer to that narrow legal question on Sept. 11, 2023 and did not provide any further legal advice on any litigation issues, according to the firm.”
• “Trenam Law said Climate First has not sought advice from the firm since September 2024.”

“Gov. Newsom Signs Bill Targeting Unethical Client-Recruiting” —

• “California lawyers who use non-attorneys to recruit clients could face $25,000 in civil penalties as well as summary disbarment under a measure signed into law by Gov. Gavin Newsom.”
• “AB 2039, signed by the governor late Sunday, offers protections to whistleblowers who report attorney misconduct to law enforcement or the state bar and places new restrictions on lawyers who lend money to clients.”
• “The provisions are a response to reports earlier this year that plaintiffs firm Downtown L.A. Law Group, or DTLA, improperly offered financial incentives to individuals to represent them in childhood sexual assault claims against Los Angeles County.”
• “‘If we’re going to demand that corporations, government, and powerful institutions be held accountable, we have to be, and we are, willing to hold ourselves to that same standard,’ CAOC President Doug Saeltzer said.”
• “Neither prosecutors nor the state bar have charged DTLA attorneys with wrongdoing in connection with the firm’s work on sexual abuse claims, although District Attorney Nathan Hochman has said he is investigating DTLA’s efforts to tap into part of Los Angeles County’s $4 billion settlement fund. DTLA attorneys have denied any misconduct. Daniel Azizi, one of the firm’s co-founders, did not return a message seeking comment on Monday.”
• “AB 2039 is among a handful of legislative responses the plaintiffs bar lobby introduced this year after both the DTLA allegations surfaced and after repeated corporate messaging targeting so-called billboard lawyers. In June, the CAOC agreed to limits on medical cost recoveries as part of a deal with Uber to stop a potential ballot initiative fight. In August, the lobby was part of a group that crafted legislation placing new restrictions on childhood sexual assault claims. And just last week, Newsom signed CAOC-backed legislation aimed at limiting investors’ influence over legal decisions.”
• “Additionally, lawyers will be required to sign contracts with any clients to whom they loan money. Those agreements must include repayment terms fees and conditions, list all potential conflicts of interest and be interest-free. Lawyers can be sanctioned up to $15,000 per violation and face possible state bar discipline.”
• “The new law also bars retaliation against clients, law firm employees, contractors, vendors and ‘any person with a professional relationship to an attorney or law firm’ who report attorney misconduct. “

“Hogan Lovells Cadwalader hacked by Silent Ransom Group; re-attacked after they wouldn’t pay” —

• “When New York City’s oldest law firm, Cadwalader, Wickersham & Taft, merged with Hogan Lovells in 2022, it combined two powerhouse firms. Yet despite their resources and knowledge of cyberattacks, and despite repeated government alerts and reporting by this site about the risk to law firms, they fell prey to Silent Ransom Group (SRG).”
• “SRG provided details of the incident to DataBreaches through a spokesperson. According to that spokesperson, SRG first gained access to Hogan Lovells’ legacy infrastructure on August 12, 2026, using a new set of tools, and exfiltrated information from several machines on the network. They did not specify the tools used, but noted that Hogan Lovells’ legacy infrastructure had a separate firewall, separate file system, and other security protocols and authorization mechanisms.”
• “They reportedly remained in Hogan Lovells’ network for 24 hours, and left on their own ‘after gathering enough data.'”
• “‘What’s important about this incident is that it is an attack carried out on two of the most top notch security systems among law firms,’ their spokesperson stated, adding, ‘and more importantly, a very active law firm in cyber security field especially after their merger.'”
• “Part of negotiations chat log. Provided with redaction by Silent Ransom Group to DataBreaches.net.”
• “According to SRG, they obtained over 50 GB of data, which they estimated included approximately 500 passports, driver’s licenses, and Social Security numbers. SRG has published all the data they exfiltrated from the first attack on their leak site.”
• “SRG provided DataBreaches with data from the second attack so we could preview it. They reportedly will upload that data to their leak site this week.”
• “Inspection of the second data set revealed mostly internal and business documents and emails. We also found passports that were still valid, personal and credit information on a human trafficking survivor, and detailed personal financial and investment records of one of HLC’s senior counsels. As we saw with the Greenberg Traurig incident, it appears a senior counsel for HLC uploaded their personal files to their office computer, and SRG exfiltrated them all.”

David Kluft asks: “If I know the judge should recuse herself, but I don’t want her to, can I keep my mouth shut?” —

• “Judges may be disqualified from a case for a number of reasons, including a personal relationship with a party, an economic interest implicated by the case, or extrajudicial knowledge of the underlying facts.”
• “ABA Opinion 522 addresses situations in which a lawyer knows about grounds for a judge’s disqualification, but for some reason the judge hasn’t raised it, perhaps because the conflict is not obvious or the judge’s memory has failed. Does the lawyer have an affirmative obligation to bring it up even though the judge doesn’t?”
• “The answer is yes, per Rule 8.4(d) (conduct prejudicial to the administration of justice). The ABA interprets Rule 8.4(d) as requiring officers of the court to speak up and disclose ‘procedural or jurisdictional information,’ that could impact the fairness of the proceedings, and that includes information that would get the judge recused. Note, however, that this duty may be limited by the duty of confidentiality under Rule 1.6.”
• Opinion: here.

“Alito bows out of blockbuster Supreme Court climate case” —

• “Supreme Court Justice Samuel Alito is stepping back from a major climate argument just a week before the court is scheduled to take up the case. Alito had faced calls to recuse himself from Suncor v. Boulder over his financial interests in energy companies. A Monday letter from Scott Harris, clerk of the court, informed the parties that Alito ‘has determined that he will not continue to participate in this case.’ The notice did not further explain his decision to sit out arguments Oct. 5, the first day of the court’s new term.”
• “In the case, Colorado localities are seeking damages under state tort laws related to the effects of climate change. The suit named Suncor and ExxonMobil. While Alito does not hold stock in those companies, he is invested in several other fossil fuel companies, including oil giants ConocoPhillips and Phillips 66. They are named in many lawsuits similar to Colorado’s that have been filed around the country. The future of those cases will be affected by the Supreme Court’s ruling in Suncor.”
• “A spokesperson for the court as recently as May had said that Alito wouldn’t recuse because he didn’t have a ‘financial interest in any party’
• involved in Suncor and that he was advised by the court’s legal counsel that ‘his recusal is not required.'”
  “Alito did recuse himself when the court turned away an appeal from the companies in the Colorado case in 2023. But that recusal came as the court on the same day rejected appeals in similar cases involving other companies, including ConocoPhillips and Phillips 66.”
• “The court spokesperson said earlier this year that Alito had ‘inadvertently recused’ himself in the earlier Colorado case ‘because it was considered at the same time as other cases where the justice did have a financial interest in the parties.'”
• “Alito had resisted calls to step aside from the upcoming climate argument, even as watchdog groups note that the entire oil industry is likely to be affected by the decision. California-based Consumer Watchdog has noted that both ConocoPhillips and Phillips 66 have warned shareholders multiple times over the past decade about the potential financial consequences of the litigation.”
• “‘The public should not have to wonder whether a justice’s personal investments could benefit from a ruling that shields the fossil-fuel industry from liability,’ said Organizing Director Alexandra Nagy.”

“NJ Justices Take On Atty DQ In Injury Cases After J&J Ruling” —

• “New Jersey’s Supreme Court has agreed to review the disqualification of an attorney from representing plaintiffs in several cases over injuries at Sky Zone trampoline parks after a trial court ruled the attorney’s retention of a former company safety official as an expert could prejudice proceedings.”
• “In June, the Superior Court’s Appellate Division affirmed a Superior Court disqualification ruling from April. Plaintiffs in the injury cases represented by Chazen then filed a motion for leave to appeal to the state’s high court.”
• “In a July brief, the plaintiffs argued that the Superior Court improperly relied on a February appellate decision that disqualified the Beasley Allen Law Firm from representing plaintiffs in multicounty litigation over Johnson & Johnson’s talc-based baby powder.”
• “In the J&J decision, an appellate panel said that the association of someone who had represented J&J as outside counsel in the talc litigation for two years with Beasley Allen and one of its attorneys had violated the state’s rules of professional conduct around nonlawyers association with lawyers and a lawyer’s duty to former clients.”
• “Chazen, as counsel for the plaintiffs in the Sky Zone injury cases and as an intervenor in the appeal, asserted in the July brief that the trial court ‘erroneously disqualified’ him based on the J&J decision.”
• “There are contradictions between the J&J disqualification decision and a prior Appellate Division ruling from 2001 regarding professional conduct rules that the state’s high court needs to clear up, Chazen said. The Supreme Court needs to weigh in on whether certain rules have been expanded to include conduct by individuals who were never attorneys, as well as if the J&J ruling should be applied retroactively to conduct before the decision was issued, he said.”
• “‘Resolution of these issues by this Court is necessary so that attorneys and litigants will have clear guidance as to what conduct is permitted under the Rules of Professional Conduct,’ the brief said.”
• “But in an opposition brief filed in July, the Sky Zone-affiliated defendants, including Rockin’ Jump Holdings LLC, argued plaintiffs in the injury cases misapprehended the Superior Court’s disqualification order and misunderstood ‘the underlying legal principles.'”
• “They say there are ‘no inconsistent rulings for which guidance is required,’ as the J&J ruling and the prior decision mentioned by the plaintiffs deal with different conduct and rules of professional conduct.”
• “The Sky Zone defendants assert their disqualification motion relates to ethical concerns that were dealt with in the J&J decision, saying that decision ‘governs disqualification arising from counsel’s association with a conflicted insider whose knowledge of adversary strategy is integrated into litigation efforts.'”
• “‘Plaintiffs’ attempt to conflate these frameworks is legally incorrect and was properly rejected by the trial court,’ they contend.”
• “At issue in the Superior Court’s April disqualification decision was Chazen’s retention of Rollin Gordon, who had been director of safety and risk management for Sky Zone from 2023 to 2024, according to court documents.”
• “In his April ruling, Superior Court Judge Gary K. Wolinetz raised concerns about Chazen’s dealings with Gordon, even though the former Sky Zone employee was barred as an expert by trial courts adjudicating the injury suits that Chazen’s clients filed.”
• “‘Clearly, as Mr. Chazen acknowledged at oral argument before me, he could have taken Gordon’s deposition and, thereafter, secured his own expert,’ Judge Wolinetz said. ‘In doing so, Mr. Chazen could have avoided the conundrum in which he now finds himself.'”
• “But Chazen ‘made a tactical decision to retain Gordon,’ the judge said, and Gordon ‘was in a position to provide confidential information to him’ that he obtained during the time he was employed at Sky Zone and related entities.”
• “‘What precise confidential and/or privileged information Gordon actually provided to Mr. Chazen and its value is not the determinative factor in this motion,’ the judge said.”
• “The judge added: ‘While Gordon was repeatedly barred by courts in this Litigation from serving as an expert witness against Sky Zone, I find that this entire situation is prejudicial to the administration of justice.'”

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“Law firm Seyfarth says breach exposed client documents” —

• “Law firm Seyfarth Shaw said in new disclosures to officials in at least two US states that it suffered a data security breach that exposed documents containing personal information, ​the latest cybersecurity incident to hit the legal industry.”
• “Seyfarth notified the ‌Texas attorney general this week about the data security incident, saying it involved names and Social Security numbers.”
• “The firm in a statement to Reuters said the breach stemmed from a ‘targeted social engineering attack in which someone impersonating our IT ​help desk deceived an employee into emailing a limited number of client documents to an unauthorized ​outside email account.’ The firm said the incident was isolated to a single ⁠employee, and that the firm’s security controls prevented access to the firm’s network or systems.”
• “Seyfarth last week reported the incident ​to the attorney general’s office in California. In a draft notice to a victim, the firm said it ‘identified unauthorized acquisition of a limited number of documents containing personal information.’ It also said that it obtained the person’s information ‘in the course ​of certain legal services performed by the firm.'”
• “The notice said an investigation of the circumstances ‘confirmed that ​there was no evidence of unauthorized access to Seyfarth’s network and that the event was limited to a small number ‌of ⁠documents sent by email to an unauthorized recipient.'”
• “Cyber incidents involving law firms are on the rise. Law firm ​BakerHostetler said in a ​report in March that ⁠its digital assets and data management groups responded to nearly 60 law firm incidents last year, almost double the number reported the previous year.”
• “Other law firms including, Quinn Emanuel, McDermott, Goodwin Procter and Herbert Smith, have disclosed data breaches in recent weeks. Law firm WilmerHale was sued in ⁠federal court ​in Washington in July following an alleged data-security breach.”

“Biglaw Firm’s Cybersecurity Headache Just Got Even Worse” —

• “Law firms have spent years warning clients about the dangers of cyberattacks. Unfortunately, hackers seem to have decided that the firms themselves make far more interesting targets.”
• “As reported by Reuters, Greenberg Traurig is now facing two proposed class actions following its disclosure that sensitive personal information was exposed in a recent data breach. The lawsuits are the latest legal fallout from an escalating wave of cyberattacks against Biglaw firms.”
• “Earlier this month, Greenberg Traurig said that an unauthorized actor had accessed a ‘limited’ number of documents and posted them on the dark web. The firm maintained that its systems were not compromised and said that only a small number of clients were affected, but a regulatory notice revealed that Social Security information had been exposed.”
• “Greenberg Traurig joins WilmerHale among the major firms that have been sued after recent breaches, while Quinn Emanuel, McDermott, HSF Kramer, and Goodwin have also disclosed cyber incidents.”
• “Biglaw may be great at protecting client confidences in court, but protecting them from hackers is becoming another matter entirely. “

“Tarter Krinsky Data Breach May Have Affected Health Info” —

• “Tarter Krinsky & Drogin LLP said in a letter this month that a data breach last year may have compromised protected health information the firm possessed due to its representation of an unnamed healthcare provider.”
• “The partially redacted Sept. 4 letter published by the California Attorney General’s Office said Tarter Krinsky became aware of suspicious activity on Sept. 10, 2025, and has recently completed its review of the materials affected by the breach. The types of information found in the potentially affected files include medical record numbers, dates of birth and treatment information.”
• “According to the letter, an investigation found that someone accessed Tarter Krinsky’s servers at various points between July 9, 2025, and Sept. 9, 2025. The firm said it isn’t aware of any identity theft, fraud or misuse of personal information stemming from the incident.”
• “‘Late last year, we identified suspicious activity on our network and immediately took steps to secure our systems and investigate the matter with the assistance of external cybersecurity professionals,’ a firm spokesperson told Law360 Pulse in an email Wednesday. ‘We have used the findings of that investigation to identify who was affected, and we’ve notified affected individuals and clients directly.'”
• “‘Unauthorized access to systems or files maintained by a law firm can create significant privacy and security concerns,’ Federman & Sherwood said. ‘Federman & Sherwood is investigating whether Tarter Krinsky & Drogin LLP implemented reasonable cybersecurity safeguards to protect sensitive information and whether additional security measures could have prevented or reduced the impact of the data breach.'”

“RICO Lawsuits Are Taking Aim at Lawyers” —

• “A series of cases are testing whether racketeering claims can serve as a counteroffensive against opposing counsel. The lawsuits assert that alleged misconduct surrounding the business of building litigation can itself become the basis for racketeering cases against attorneys.”
• “Defendants have primarily deployed the tactic against personal injury and mass tort attorneys, with litigation from Uber Technologies Inc. emerging as one of the most prominent examples of the approach. The jury is still out on whether these claims can stick, with courts issuing mixed results as they begin weighing the legal theory.”
• “Uber has also hit several attorneys filing collision cases with suits alleging that they violated the federal Racketeer Influenced and Corrupt Organizations Act, or RICO Act, by collaborating with health care professionals to inflate medical costs and expand damages claims. In recent months, several judges have started testing the viability and limits of that strategy.”
• “Last month, U.S. District Judge Orelia Merchant of the Eastern District of New York dismissed Uber’s case against Wingate, Russotti, Shapiro, Moses & Halperin, finding deficiencies in Uber’s allegations of a RICO enterprise, conspiracy and injury. Merchant also concluded that Uber had not plausibly alleged that the defendants shared the necessary ‘common purpose.'”
• “‘At best,’ Merchant wrote, the allegations showed the doctors ‘received benefits incidental to an ordinary and lawful client-referral relationship and third-party litigation financing of medical treatment …’ rather than sharing a common purpose of fraudulent conduct.”
• “A California judge, however, reached the opposite conclusion over Uber’s allegations against another group of plaintiffs firms. U.S. District Judge Sherilyn Peace Garnett of the Central District of California found that Uber had plausibly alleged a relationship that went beyond an ordinary commercial relationship between attorneys and a spine surgeon. Garnett pointed to allegations suggesting the defendants acted in furtherance of a ‘common purpose’ of generating inflated medical bills to extract higher settlements from plaintiff.'”
• “Meanwhile, in an Aug. 27 ruling, U.S. District Judge Mark A. Kearney of the Eastern District of Pennsylvania rejected personal injury firm Simon & Simon’s counterclaims that RICO litigation from Uber and FedEx constituted sham litigation, among other claims.”
• “Still, the first sentences of Kearney’s ruling acknowledged the stakes for the defendants in these cases. ‘We appreciate experienced personal injury lawyers and doctors do not like reading their names in federal court complaints alleging their specific roles in alleged racketeering conduct,’ he wrote. ‘Especially when those allegations are made by companies Uber and FedEx whom they often sue in Philadelphia County seeking to recover for alleged personal injury losses subject to the state court judge’s and jury’s scrutiny. And then these allegations show up in press reports.'”
• “Simon & Simon is now claiming that Uber does not have sufficient financial stake in the underlying litigation, arguing its insurer Farmers Insurance Exchange has covered all settlement and defense costs in the litigation.”
• “‘This is a full stop,’ wrote the firm’s Blank Rome attorneys. ‘Discovery definitively shows that Uber has paid nothing and has no harm. Precedent is clear that a RICO lawsuit cannot be sustained where a secondary source, like Farmers, is paying the alleged damages. There is no caselaw in any jurisdiction that would support allowing Uber to continue with a RICO case in light of this admitted lack of standing. Only Farmers has standing to bring this RICO action.'”
• “The emerging litigation tactic is a response to so-called nuclear verdicts and high-volume litigation in certain jurisdictions, according to some experts.”
• “Regardless of how federal RICO claims against attorneys fare, they are unlikely to be the last attempt by corporations and their defense counsel to turn litigation against the lawyers who regularly sue them.”
• “In Georgia, for instance, the state Supreme Court is considering a case that could clarify when attorneys can pursue competing lawyers under the Georgia RICO Act. The case involves a plaintiffs attorney who alleges a competing firm engages in case running, or illegally obtaining accident victim data to solicit them before other lawyers can.”
• “Companies are already testing alternatives when RICO claims fail. After Ford’s racketeering case against Los Angeles Lemon Law attorneys was dismissed, the company’s Kasowitz counsel filed a complaint in June alleging plaintiffs’ firm Quill & Arrow lures customers through fraudulent advertising and convinces them not to participate in its repurchasing offer.”
• “As the financial stakes surrounding personal injury and mass tort litigation rise, plaintiffs attorneys could increasingly find themselves on the other side of the ‘v.’ RICO may be only one theory corporations and their defense counsel test in litigation aimed not merely at defeating individual claims, but at challenging the conduct of the lawyers bringing them.”

“Womble Bond Can’t Quit Dutch Client With TM Trial Looming” —

• “Womble Bond Dickinson can’t withdraw from a trademark feud that’s dragged on for more than five years between U.S. and Dutch software companies, a North Carolina federal judge ruled, saying the firm’s exit at this late stage ‘would be completely disruptive.'”
• “U.S. District Judge Martin Reidinger on Monday denied Womble Bond’s request to pull its representation of Dutch software company DMARC Advisor BV, in which the firm claimed withdrawal was necessary because of a ‘fundamental disagreement about the conduct of this litigation.’ According to Judge Reidinger, Womble Bond declined to provide the particulars of its rift with the client, even for in camera review.”
• “‘In short, counsel has left the court in the dark as to whether there is good cause for their withdrawal. Counsel’s assertion that the court should simply trust their word is simply unavailing,’ the judge wrote.”
• “‘It is counsel’s obligation to demonstrate cause. A bare assertion of a ‘fundamental disagreement’ might be sufficient if it were very early in the case and such withdrawal would work no prejudice to any party,’ he continued. ‘But here, 5½ years into a case and upon the doorstep of trial, such a bare assertion is simply insufficient.'”
• “Judge Reidinger also called out the paradox of the firm’s request given the events that preceded it. Previously, DMARC Advisor and one of its attorneys at Womble Bond were held in civil contempt for failing to correct misrepresentations allegedly made to a court in the Netherlands in a parallel lawsuit.”
• “As punishment, Judge Reidinger suspended the attorney, Pressly Millen, from practicing in the Western District of North Carolina until the case was resolved or he apologized to the foreign tribunal. The Fourth Circuit reversed his order on appeal this summer, finding it to be ‘overtly punitive.'”
• “In Monday’s opinion, Judge Reidinger said it is ‘ironic’ that DMARC Advisor’s counsel appealed the suspension ‘on the grounds that the defendant would be unduly prejudiced by being deprived of an attorney so knowledgeable of the case.'”
• “‘Now, upon the Court of Appeals reversing the court’s sanction and reinstating that attorney, that same attorney and his firm now move to withdraw,’ the judge wrote.”
• “The case dates to 2021, when North Carolina-based software company Dmarcian Inc. first sued DMARC Advisor over the ownership, licensing and use of certain source code.”